a) Calculation:

$Equity=\left(Shares\right)\times$ $(Price\text{}of\text{}shares)$...... (I)

Substitute 40000 for shares, and $80.75 for Price of shares in Equation (I).

$Equity=\mathrm{\$}40000\times 80.75}$

$=\mathrm{\$}3230000}$

Calculate the total bond fund.

$\text{Bond fund}=\left(\text{Number of bond}\right)\times \left(\text{Bond value}\right)$ ......(II)

Substitute 12,500 for number of bonds, and $1090 for bond value in Equation (II).

Bond fund $=\mathrm{\$}12500\times \mathrm{\$}1090}$

$=\mathrm{\$}13625000}$

Calculate the total fund.

Total fund $=\mathrm{\$}3230000+\mathrm{\$}9000000+\mathrm{\$}13625000}$

$=\mathrm{\$}17755000}$

Calculate the cost of capital before tax.

$$\begin{array}{|ccccc|}\hline Particulars& Fund(A)& Weight(B)(\frac{A}{\$17755000})& Rate(C)& \text{Weighted Rate}(B\times C)\\ Equity& \$3230000& 0.18& 15\mathrm{\%}& 2.73\\ Bonds& \$13625000& 0.77& 6\mathrm{\%}& 0.32\\ Loan& \$900000& 0.05& 6.4\mathrm{\%}& 4.60\\ Total& \$17755000& & & 7.66\mathrm{\%}\\ \hline\end{array}$$

Conclusion:

Therefore, the cost of capital before tax is, $6.50\mathrm{\%}$.

b) Calculate the rate for the loan.

Rate $=6.4\mathrm{\%}(1-0.40)$

$=3.84\mathrm{\%}$

Calculate the interest rate on the bonds.

Rate $=6\mathrm{\%}(1-0.40)$

$=3.6\mathrm{\%}$ Calculate the interest rate on Equity.

Rate $=15\mathrm{\%}(1-0.40)$

$=9\mathrm{\%}$

Calculate the cost of capital after tax.

$$\begin{array}{|ccccc|}\hline Particulars& Fund(A)& Weight(B)(\frac{A}{\$17755000})& Rate(C)& \text{Weighted Rate}(B\times C)\\ Equity& \$3230000& 0.18& 9\mathrm{\%}& 1.62\\ Bonds& \$13625000& 0.77& 3.6\mathrm{\%}& 2.772\\ Loan& \$900000& 0.05& 3.84\mathrm{\%}& 0.192\\ Total& \$17755000& & & 4.584\mathrm{\%}\\ \hline\end{array}$$

Conclusion:

Therefore, the cost of capital after tax is, $4.584\mathrm{\%}$.